How Bush's Iraqi Oil Grab Went Awry

Here is the sentence in The Age of Turbulence, the 531-page memoir of former Federal Reserve chief Alan Greenspan, that caused so much turbulence in Washington last week: "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil." Honest and accurate, it had the resonance of the Bill Clinton's election campaign mantra, "It's the economy, stupid." But, finding himself the target of a White House attack--an Administration spokesman labeled his comment, "Georgetown cocktail party analysis"--Greenspan backtracked under cover of verbose elaboration. None of this, however, made an iota of difference to the facts on the ground.

Here is a prosecutor's brief for the position that "the Iraq War is largely about oil":

The primary evidence indicating that the Bush Administration coveted Iraqi oil from the start comes from two diverse but impeccably reliable sources: Paul O'Neill, the Treasury Secretary (2001-2003) under President George W. Bush; and Falah Al Jibury, a well-connected Iraqi-American oil consultant, who had acted as President Ronald Reagan's "back channel" to Iraqi President Saddam Hussein during the Iraq-Iran War of 1980-88. The secondary evidence is from the material that can be found in such publications as the New York Times and the Wall Street Journal.

According to O'Neill's memoirs, The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O'Neill, written by journalist Ron Suskind and published in 2004, the top item on the agenda of the National Security Council's first meeting after Bush entered the Oval Office was Iraq. That was January 30, 2001, more than seven months before the 9/11 attacks. The next National Security Council (NSC) meeting on February 1 was devoted exclusively to Iraq.

Advocating "going after Saddam" during the January 30 meeting, Defense Secretary Donald Rumsfeld said, according to O'Neill, "Imagine what the region would look like without Saddam and with a regime that's aligned with U.S. interests. It would change everything in the region and beyond. It would demonstrate what U.S. policy is all about." He then discussed post-Saddam Iraq -- the Kurds in the north, the oil fields, and the reconstruction of the country's economy. (Suskind, p. 85)

Among the relevant documents later sent to NSC members, including O'Neill, was one prepared by the Defense Intelligence Agency (DIA). It had already mapped Iraq's oil fields and exploration areas, and listed American corporations likely to be interested in participating in Iraq's petroleum industry.

According to high-flying oil insider Falah Al Jibury, the Bush Administration began making plans for Iraq's oil industry "within weeks" of Bush taking office in January 2001. In an interview with the BBC's Newsnight program, which aired on March 17, 2005, he referred to his participation in secret meetings in California, Washington, and the Middle East, where, among other things, he interviewed possible successors to Saddam Hussein.

By January 2003, a plan for Iraqi oil crafted by the State Department and oil majors emerged under the guidance of Amy Myers Jaffe of the James A. Baker III Institute for Public Policy at Rice University. It recommended maintaining the state-owned Iraq National Oil Company, whose origins dated back to 1961--but open it up to foreign investment after an initial period in which U.S.-approved Iraqi managers would supervise the rehabilitation of the war-damaged oil infrastructure. The existence of this group would come to light in a report by the Wall Street Journal on March 3, 2003.

Unknown to the architects of this scheme, according to the same BBC Newsnight report, the Pentagon's planners, apparently influenced by powerful neocons in and out of the administration, had devised their own super-secret plan. It involved the sale of all Iraqi oil fields to private companies with a view to increasing output well above the quota set by the Organization of the Petroleum Exporting Countries (OPEC) for Iraq in order to weaken, and then destroy, OPEC.

Secondary Evidence

On October 11, 2002 the New York Times reported that the Pentagon already had plans to occupy and control Iraq's oilfields. The next day The Economist described how Americans in the know had dubbed the waterway demarcating the southern borders of Iraq and Iran "Klondike on the Shatt al Arab," while Ahmed Chalabi, head of the US-funded Iraqi National Congress and a neocon favorite, had already delivered this message: "American companies will have a big shot at Iraqi oil--if he gets to run the show."

On October 30, Oil and Gas International revealed that the Bush administration wanted a working group of twelve to twenty people to (a) recommend ways to rehabilitate the Iraqi oil industry "in order to increase oil exports to partially pay for a possible U.S. military occupation government," (b) consider Iraq's continued membership of OPEC, and (c) consider whether to honor contracts Saddam Hussein had granted to non-American oil companies.

By late October 2002, columnist Maureen Dowd of the New York Times would later reveal, Halliburton, the energy services company previously headed by Vice President Dick Cheney, had prepared a confidential 500-page document on how to handle Iraq's oil industry after an invasion and occupation of Iraq. This was, commented Dowd, "a plan [Halliburton] wrote several months before the invasion of Iraq, and before it got a no-bid contract to implement the plan (and overbill the U.S.)." She also pointed out that a Times request for a copy of the plan evinced a distinct lack of response from the Pentagon.

In public, of course, the Bush Administration built its case for an invasion of Iraq without referring to that country's oil or the fact that it had the third largest reserves of petroleum in the world. But what happened out of sight was another matter. At a secret NSC briefing for the President on February 24, 2003, entitled, "Planning for the Iraqi Petroleum Infrastructure," a State Department economist, Pamela Quanrud, told Bush that it would cost $7 billion to $8 billion to rebuild the oil infrastructure, if Saddam decided to blow up his country's oil wells, according to Washington Post reporter Bob Woodward in his 2004 book, Plan of Attack (pp. 322-323). Quanrud was evidently a member of the State Department group chaired by Amy Myers Jaffe.

When the Anglo-American troops invaded on March 20, 2003, they expected to see oil wells ablaze. Saddam Hussein proved them wrong. Being a staunch nationalist, he evidently did not want to go down in history as the man who damaged Iraq's most precious natural resource.

On entering Baghdad on April 9, the American troops stood by as looters burned and ransacked public buildings, including government ministries--except for the Oil Ministry, which they guarded diligently. Within the next few days, at a secret meeting in London, the Pentagon's scheme of the sale of all Iraqi oil fields got a go-ahead in principle.

The Bush Administration's assertions that oil was not a prime reason for invading Iraq did not fool Iraqis though. A July 2003 poll of Baghdad residents--who represented a quarter of the Iraqi national population--by the London Spectator showed that while 23 percent believed the reason for the Anglo-American war on Iraq was "to liberate us from dictatorship," twice as many responded, "to get oil". (Cited in Dilip Hiro, Secrets and Lies: Operation "Iraqi Freedom" and After, p. 398.)

As Iraq's principal occupier, the Bush White House made no secret of its plans to quickly dismantle that country's strong public sector. When the first American proconsul, retired General Jay Garner, focused on holding local elections rather than privatizing the country's economic structure, he was promptly sacked.